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Pacific is a seller to mass retailers such as Toys R Us and Wal-Mart.
Nine days ago it outbid the Huffy Corporation to become the new owner of Schwinn/GT. Pacific paid $86m.
Fears that Schwinn and GT would be offered to mass retailers were confirmed. Pacific president and chief operating officer Byron Smith said Pacific would operate a "dual channel strategy".
He said most other markets do just fine with such strategies.
"Dual channel marketing is very successful, the bicycle trade is the exception here."
However, Chris Horning, Pacific’s CEO said:
"We are committed to developing and reinforcing the dealer network."
No deal has yet been reached with the UK receiver running Schwinn/GT Europe Ltd., the UK and Europe distributor. Nor has a UK distributor been appointed, although Pacific will definitely appoint one rather than create a Pacific-owned subsiduary.
Pacific will use its economies of scale, freight shipping muscle and lean operating practices to produce bicycles with "compelling value to customers," said Horning.
He said IBDs had reacted favourably to the dual channel strategy. Mass retailers wouldn’t receive Schwinn or GT bikes until Autumn 2002.
When asked whether Pacific would continue with the Schwinn and GT race teams, Horning said the freestyle air show team was safe but the future for the MTB teams had yet to be decided.
"We’re only nine days in, we’ve got to evaluate all aspects of our spend."
When asked whether Pacific would honour Schwinn/GT warranties, Byron Smith said Pacific was under no obligation to do so thanks to Schwinn/GT filing for Chapter 11 bankruptcy however Pacific would honour all pre-existing warranties as it would be "good business practice" to do so.
The new product development team would be slimmed down and the ‘dual channel strategy’ would involve putting mid to top-end bikes into IBDs and low end Schwinns and GTs into mass retailers such as Toys R Us and Wal-mart.
Ramping up sales via mass retailers makes perfect sense to Pacific.
Smith said: "The bicycle market is too competitive – especially on the speciality side – to make investments that bring in little or no return."
When bikebiz.co.uk asked whether Pacific got a good deal, paying $86m for Schwinn/GT when the Cycle Bid Co paid just $26m for Raleigh and Diamondback, and the rest of the Dercy Cycle Corporation, Smith said:
"We feel we’ve got a better set of brands."
CAPTIONS:
Left: Chris Horning, Pacific CEO
Right: Byron Smith, Pacific COO
